Aug 25 (Reuters) - Citibank's preliminary estimate of month-end FX rebalancing flows points to a net USD selling need on Monday, Aug. 31.
All G10 equity markets are showing gains in August, with the MSCI US index among the top performers at 4%, although behind Japanese equities at 7%.
Citibank say this relative outperformance of US assets has likely left foreign investors under-hedged, giving a new USD sell signal to increase hedges.
Good performance of Japanese assets means that the sell USD/JPY signal is amongst the weakest this month, according to Citibank, while the signal to buy GBP/USD is amongst the strongest.
The bank also highlighted the potential risk of heightened USD selling against EUR this month.
However, despite a lack of any significant data before the month-end fix, Citibank recognised the headline risk to FX from the Jackson Hole symposium being held in the days before.
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(Richard Pace is a Reuters market analyst. The views expressed are his own)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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